Real Estate Terms & Definitions
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CONTRACT FOR PURCHASE AND SALE OF REAL
ESTATE
Written document submitted by a buyer or seller to reach an agreement on the
purchase/sale of a piece of property providing the basis for all that follows
until title is transferred and possession taken by the buyer. For more details,
call Branam's ~ (785) 364-2606 or (800) 795-5537!
EARNEST MONEY DEPOSIT
At the time a written offer is initiated, the earnest money deposit is given as
a guarantee that the Buyer will perform under the purchase agreement. The amount
is deposited into a third party trust account upon acceptance of the contract
and remains in that account until the time of closing. At closing, the money is
applied toward the purchase price of the property. If the contract is not
accepted or you do not qualify for a loan, your earnest money will be returned
to you. (Providing the sellers are given notice regarding the lender’s
disapproval and a release is signed by all parties to the purchase agreement.)
MORTGAGE LOAN APPLICATION
Once buyers and sellers have agreed on the price and terms of the purchase, the
next step is a loan application. An application form is completed with a
mortgage loan originator, expediting all necessary paperwork, including ordering
a credit report and appraisal for the property. Anyone who will be on the title
as new owners should be present. You may be required to pay in advance for your
credit report and appraisal, and possibly a mortgage survey. The appraisal is
required by the lender to determine that the amount of the loan is justified
based on the appraised value of the property. The mortgage survey is used to
determine that all improvements are within the property lines, but not used to
construct fences, etc. (you may order a staked survey at an additional charge.)
At this time, you will receive the lender’s “good faith” estimate of all costs
so there are no surprises at the time of closing.
POINTS AND DISCOUNT POINTS
Points fluctuate because the mortgage market is much like the stock market,
rising & falling prices based on supply and demand. The mortgage market is an
integral part of the national money market serving all kinds of capital and
credit needs. If rates (yields) on mortgage loans are lower than other
investments such as stocks or bonds, the funds will be drawn away from the
mortgage market. When there is a heavy demand upon the money market because of
business needs, military requirements or other government borrowing, the result
is that money for home mortgages becomes scarce and more expensive. POINTS
CHARGED TO BUYER'S ARE ESSENTIALLY "PRE-PAID INTEREST" in many respects. Call
and let us explain...
TITLE INSURANCE
When property is sold or refinanced, the lender and buyer need a preliminary
title commitment that will indicate the vested owner of record and any
restriction on use of the subject property. Title insurance is required on most
property in Kansas by lenders. In addition, the buyer is also required to furnish the
lender with a lender’s policy showing the lender as a lien holder on that
property charges are included in the closing costs. When the sale is final, the
title insurance company will record the necessary documents and will issue a
title insurance policy to the new Buyer and the lender showing marketable title
to the property.
MORTGAGE INSURANCE
Insurance that covers part of the lender’s risk on high-ratio loan to value
loans. It protects the lender from loss due to payment default by the borrower.
With this insurance protection, the lender is willing to make a larger loan,
thus reducing your down payment requirements. This type of insurance should not
be confused with mortgage life, credit life, or disability insurance designed to
pay off a mortgage in the event of physical disability or death of the borrower.
For more details, call Branam's ~ (785) 364-2606 or (800) 795-5537!
HOMEOWNERS INSURANCE
Insurance protection for you and the lender against loss due to fire, windstorm
and natural hazards. Lenders usually require the first year premium plus two
months to be paid in advance. In some instances the lender may also require
flood insurance at an additional charge.
HOME INSPECTION
This is advised when purchasing a new or pre-owned home. Included in this are:
appliances, plumbing systems, electrical systems, heating, cooling & ventilating
systems, bath & kitchen fixtures, crawl spaces, basements, garages, roofs,
attics, and general condition of the home. Remember, this is not a guarantee of
the condition of the property, but it does help determine if there are existing
problems. Costs vary depending on the size of the home. For more details, call
Branam's ~ (785) 364-2606 or (800) 795-5537!
STRUCTURAL INSPECTION OR ENGINEER’S
REPORT
This inspection will help to determine the condition of the structure and
foundation to defects, if any, that may need to be corrected. Cost is similar to
the Home Inspection. Buyer’s will first have a home inspection which will help
determine if additional inspections are needed. For more details, call Branam's
~ (785) 364-2606 or (800) 795-5537!
RADON INSPECTION
Buyers may want to have the property tested for radon, a potentially harmful
radioactive gas emitted from the ground. It seeps into a home through foundation
cracks or crevices and can be determined by a qualified inspection company.
TERMITE INSPECTION
Purchased by Buyer or Seller, this inspection should be done by a licensed
termite treatment company and is required by most lending institutions prior to
settlement.
LEAD PAINT
If the property you intend to purchase was built before 1978, it is mandatory
that you be informed, that it may contain lead based paint. Because lead paint
can cause health problems for people, especially young children, you may want to
have the property tested for lead paint.
BASEMENTS
While basements provide definite benefits to homeowners, all Buyers should be
aware that they can develop unexpected problems overnight, due to changes in
wetness, temperature, grade of soil, gutter, downspout condition, which can
affect basement dryness and structural conditions.
PRIOR TO CLOSING
Your Branam’s Inc. Realtor will review with you all that is required for
closing, going over all closing costs and verifying lender requirements are
completed.
CLOSING PROCEDURE
Payment should be in the form of a cashier’s check or certified funds made out
to the closing company. At this time, arrangements for keys and possession will
be made. Closings are held at a title company, a real estate office, or a
lending institution and those in attendance are Buyer, and their Real Estate
Associates.
Kansas real estate terms and definitions throughout northeast Kansas, Topeka, Holton, Mayetta, Seneca, Hiawatha, Brown County, Jackson County, Shawnee County, Atchison County
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